2012

A money market transaction does not necessarily include a rollover, which would take place only if the parties agree to the reinvestment of the proceeds of the earlier money market transaction. (Penta Capital Corporation v. Bay, 663 SCRA 192)

Although the contract of a surety is in essence secondary only to a valid principal obligation, the surety becomes liable for the debt or duty of another although it possesses no direct or personal interest over the obligations nor does it receive any benefit therefrom. And notwithstanding the fact that the surety contract is secondary to the principal obligation, the surety assumes liability as a regular party to the undertaking. (First Lepanto-Taisho Insurance Corporation v. Chevron Philippines, Inc., 663 SCRA 309)

The extent of a surety’s liability is determined by the language of the suretyship contract or bond itself. It cannot be extended by implication, beyond the terms of the contract. Id

The law is clear that a surety contract should be read and interpreted together with the contract entered into between the creditor and the principal contract or undertaking which it secures. Id

It bears stressing that the contract of suretyship imports entire good faith and confidence between the parties in regard to the whole transaction, although it has been said that the creditor does not stand as a fiduciary in his relation to the surety, after all, obligations arising from contracts have the force of law between the parties and should be complied with in good faith. Id

An investment contract is a contract, transaction, or scheme where a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others. (Securities and Exchange Commission v. Prosperity Com, Inc., 664 SCRA 28)

The United States Supreme court held in Securities and Exchange Commission v. W.J. Howey Co., that, for an investment contract to exists, the following elements, referred to as the Howey test must concur: 1) a contract, transaction or scheme 2)an investment of money, 3)investment is made in a common enterprise; 4)expectation of profits, and 5)profits arising primarily from the efforts of others. Id

The practice in the case of banks is that they automatically collect their management fees from the funds that their clients entrust to them for investment or lending to others. (Advent Capital and Finance Corporation v. Alcantara, 664 SCRA 224)

The real owner of the entrust company is the trustor – beneficiary. Id Rehabilitation proceedings are summary and non-adversarial in nature, and do not contemplate

adjudication of claims that must be threshed out in ordinary court proceeding. Id Where a bank maintains branches, each branch becomes a separate business entity with

separate books of account; nevertheless, when considered with relation to the parent bank they are not independent agencies; they are, what their name imports, merely branches, and are subject to the supervision and control of the parent bank; Ultimate liability for a debt of a branch would rest upon the parent bank. (Philippine Deposit Insurance Corporation vs. Citibank, N.A., 669 SCRA 191)

Both Section 75 of R.A. No. 8791 and Section 5 of R.A. No. 7221 require the head office of a foreign bank to guarantee the prompt payment of all liabilities of its Philippine branch. Id

The purpose of the Philippine Deposit Insurance Corporation (PDIC) is to protect the depositing public in the event of a bank closure. Id

The head office of a bank and its branches are considered as one under the eyes of the law. While branches are treated as separate business units for commercial and financial reporting purposes, in the end, the head office remains responsible and answerable for the liabilities of its branches which are under its supervision and control. Id

A bill of lading is defined as an instrument in writing, signed by a carrier or his agent, describing the freight so as to identify it, stating the name of the consignor, the terms of the contract for carriage, and agreeing or directing that the freight to be delivered to the order or assigns of a specified person at a specified place. (Ace Navigation Co., Inc. vs. FGU Insurance Corporation, 674 SCRA 348)

The fiduciary nature of every bank’s relationship with its clients/depositors impels it to exercise the highest degree of care, definitely more than that of a reasonable man or a good father of a family. (Westmont Bank vs Dela Rosa-Ramos, 684 SCRA 429)

A bank’s liability as an obligor is not merely vicarious, but primary since they are expected to observe an equally high degree of diligence, not only in the selection, but also in the supervision of its employees. Id

A trademark device is susceptible to registration if it is crafted fancifully or arbitrarily and is capable of identifying and distinguishing the goods of one manufacturer or seller from those of another. (Great White Shark Enterprises, Inc. vs. Caralde, Jr., 686 SCRA 201)

In determining similarity and likelihood of confusion, case law has developed the Dominancy Test and the Holistic or Totality Test. Id

Consistent with Alcaraz, Ledda must also pay interest on the total unpaid credit cart amount at the rate of 12% per annum since her credit card obligation consists of a loan or forbearance of money (Ledda vs. Bank of the Philippine Islands, 686 SCRA 285)

Section 13 of the Trust Receipts Law explicitly provides that if the violation or offense is committed by a corporation, as in this case, the penalty provided for under the law shall be imposed upon the directors, officers, employees or other officials or person responsible for the offense, without prejudice to the civil liabilities arising from the criminal offense. (Crisologo vs People, 686 SCRA 285)

Debts incurred by directors, officers, and employees acting as corporate agents are not their direct liability but of the corporation they represent. Id

Rehabilitation is an attempt to conserve and administer the assets of an insolvent corporation in the hope of its eventual return from financial stress to solvency. (Express Investment III Private Ltd. And Export Development Canada vs. Bayan Telecommunications, Inc., 687 SCRA 50)

In January 2004, Republic Act No. 8799, otherwise known as the Securities Regulation Code, amended Section 5 of PD 902-A, and transferred to the Regional Trial Courts the jurisdiction of the Securities and Exchange Commission over petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all its debts but foresees the impossibility of meeting them when they are respectively fall due or in cases wehre the

corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a rehabilitation receiver or a management committee. Id

Under Section 6, Rule 4 of the Interim Rules, if the court finds the petition to be sufficient in form and substance, it shall issue, not later than five days from the filing of the petition, an Order. Id

The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings. Id

Section 6(c), PD 902-A provides that upon the appointment of a management committee, rehabilitation receiver, board or body, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. Id

During rehabilitation receivership, the assets are held in trust for the equal benefit of all creditors to preclude one from obtaining an advantage or preference over another by the expediency of an attachment, execution or otherwise. Id

Basically, once a management committee or rehabilitation receiver has been appointed in accordance with PD 902-A, no action for claims may be initiated against a distressed corporation and those already pending in court shall be suspended in whatever stage they may be. Id

During rehabilitation, the only payments sanctioned by the Interim Rules are those made to creditors in accordance with the provisions of the plan. Id

Upon a showing that the creditor is lacking in protection, the court shall order the rehabilitation receiver to take steps to ensure that the property is insured or maintained or to make payment or provide replacement security such that the obligation is fully secured. Id

Under Section 12, Rule 4 of the Interim Rules, a secured creditor may file a motion with the Rehabilitation court for the modification or termination of the stay order. Id

Section 5(d), PD 902-A vested jurisdiction upon the Securities and Exchange Commission (SEC) over petitions for rehabilitation. Later, RA 8799 or the Securities Regulation Code, amended Section 5(d) of PD 902-A by transferring SEC’s jurisdiction over said petitions to the Regional Trial Court. Id

The term “capital” in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election directors. Id

Section 5(d), Rule 4 of the Interim Rules provides that the rehabilitation plan shall include the means for the execution of the rehabilitation plan, which may include conversion of the debts or any portion thereof to equity, restructuring of the debts, dacion en pago, or sale of assets or of the controlling interest. Id

During rehabilitation, the assets of the distressed corporation are held in trust for the equal benefit of all creditors to preclude one form obtaining an advantage or preference over another. All creditors should stand on equal footing. Id

During rehabilitation, the assets of the distressed corporation are held in trust for the equal benefit of all creditors to preclude one from obtaining an advantage or preference over another. All creditors should stand on equal footing. Id

Both secured and unsecured creditors shall suffer a write-off of penalties and default interest and the escalating interest rates shall be equally imposed on them; the commitment embodied

in the pari passu principle only goes so far as to ensure that the assets of the distressed corporation are held in trust for the equal benefit of all creditors. Id

Unlike in adversarial proceedings, the court in rehabilitation proceedings appoints a receiver to study the best means to revive the debtor and to ensure that the value of the debtor’s property is reasonably maintained pending the determination of whether or not the debtor should be rehabilitated, as well as implement the rehabilitation plan after its approval. Id

Section 6(d) of PD empowers the Rehabilitation Court to create and appoint a management committee to undertake the management of corporations when there is imminent danger of dissipation, loss, wastage or destruction of assets or other properties or paralyzation of business operations of such corporations which may be prejudicial to the interest of minority stockholders, parties-litigants or the general public. Id

The management committee or rehabilitation receiver, board or body shall have the following powers: (1) to take custody of, and control over, all the existing assets or property of the distressed corporation; (2) to evaluate the existing assets and liabilities, earnings and operations of the corporation; (3) to determine the best way to salvage and protect the interest of the investors and creditors; (4) to study, review and evaluate the feasibility of continuing operations and restructure and rehabilitate such entities if determined to be feasible by the Rehabilitation Court; and (5) it may overrule or revoke the actions of the previous management and board of directors of the entity or entities under management and board of directors of the entity or entities under management notwithstanding any provision of law, articles of incorporation or by-laws to the contrary. Id

Section 185 of the Negotiable Instruments Law defines a check as a “bill of exchange drawn on a bank payable on demand,” while Section 126 of the said law defines a bill of exchange as “an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or the bearer. “ (Aglibot vs. Santia, 687 SCRA 283)

The relation between an accommodation party and the party accommodated is, in effect, one of principal and surety- the accommodation party being the surety. It is settled rule that a surety is bound equally and absolutely with the principal and is deemed an original promisor and debtor from the beginning. The Unlike in a contract of suretyship, the liability of the accommodation party remains not only primary but also unconditional to a holder for value, such that even if the accommodated party receives an extension of the period for payment without the consent of the accommodation pary, the latter is still liable for the whole obligation and such extension does not release him because as far as a holder for value is concerned, he is a solidary co-debtor. Id

2013

The Financial Rehabilitation and Insolvency Act of 2010 (FRIA) provides that its provisions may be applicable to further proceedings in pending cases, except to the extent that, in the opinion

of the court, their application would not be feasible or would work injustice. (Situs Dev. Corporation vs. Asiatrust Bank, 688 SCRA 621)

The issuance of a Stay Order cannot suspend the foreclosure of accommodation mortgages. The law on trademarks and trade names precisely precludes a person from profiting from the

business reputation built by another and from deceiving the public as to the origins of products. (Uyco vs Lo, 689 SCRA 378)

Obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities. A director, officer or employee of a corporation is generally not held personally liable for obligations incurred by the corporation. (Heirs of Fe Tan Uy vs International Exchange Bank 690 SCRA 519)

Before a director or officer of a corporation can be held personally liable for corporate obligations, however, the following requisites must concur: (1) the complainant must allege in the complaint that the director or officer assented to patently unlawful acts of the corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the complainant must clearly and convincingly prove such unlawful acts, negligence or bad faith. Id

The piercing of the veil of corporate fiction is frowned upon and can only be done if it has been clearly established that the separate and distinct personality of the corporation is used to justify a wrong, protect fraud, or perpetrate a deception. Id

Under a variation of the doctrine of piercing the veil of corporate fiction, when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or one and the same. Id

Under Section 4 of the Trust Receipts Law, the sale of goods by a person in the business of selling goods for profit who, at the outset of the transaction, has, as against the buyer, general property rights in such goods, or who sells the goods to the buyer on credit, retaining title or other interest as security for the payment of the purchase price, does not constitute a trust receipt transaction and is outside the purview and coverage of the law. (Dela Cruz vs Planters Products, Inc., 691 SCRA 28)

The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following: (1) the trademark being infringed is registered in the Intellectual Property Office; (2) the trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer; (3) the infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business or services; or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services; (4) the use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as tot eh source or origin of such goods or services or the identity of such business; and (5) the use or application of the infringing mark is without the consent of the trademark owner or the assignee thereof. (Diaz vs People, 691 SCRA 139)

The likelihood of confusion is the gravamen of the offense of trademark infringement. There are two tests to determine likelihood of confusion, namely: the dominancy test, and the holistic test. Id

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced because each case must be decided on its merits. Id

The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in relation to jeans products. Accordingly, the jeans trademarks of Levi’s Philippines and Diaz must be considered as a whole in determining the likelihood of confusion between them. Id

By virtue of the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the stock holder. This protection from liability for shareholders is the principle of limited liability. (Philippine National Bank vs Hydro Resources Contractors Corporation, 693 SCRA 294)

The corporate mask may be removed or the corporate veil pierced when the corporation is just an alter ego of a person or of another corporation. Id

Case law lays down a three-pronged test to determine the application of the alter ego theory, which is also known as the instrumentality theory. Id

In applying the alter ego doctrine, the courts are concerned with reality and not form, with how the corporation operated and the individual defendant’s relationship to that operation. Id

Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. Id

There is abn intra-corporate controversy when the dispute involves any of the following relationships, to wit: (a) between the corporation, partnership or association and the public; (b) between the corporation, partnership or association and the State in so far as its franchise, permit or license to operate is concerned; (c) between the corporation, partnership or association and its stockholders, partners, members or officers, and (d) among the stockholders, partners or associates themselves. (Philippine Overseas Telecommunications Corporation (POTC) vs. Africa, 700 SCRA 453)

Upon the enactment of Republic Act No. 8799 (The Securities Regulation Code), effective on August 8, 2000, the jurisdiction of the SEC over intra-corporate controversies and the other cases enumerated in Section 5 of PD No. 902-A was transferred to the Regional Trial Court pursuant to Section 5.2 of the law. Id

The trial court is mandated to render a decision within 15 days from receipt of the last pleading, or from the date of the last hearing, as the case may be. Id

The Carriage of Goods by Sea Act (COGSA) or Public Act No. 521 of the 74 th US Congress, was accepted to be made applicable to all contract for the carriage of goods by sea and to from Philippine ports in foreign trade by virtue of Commonwealth Act (CA) No. 65. (Asian Terminals, Inc. vs Philam Insurance Co., 702 SCRA 88)

A letter of credit is a financial devise developed by merchants as convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of his goods before paying. Id

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Id

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. Id

The functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. Id

Any act of the Monetary Board placing a bank under conservatorship, receivership or liquidation may not be restrained or set aside except on a petition for certiorari. (Vivas vs. Monetary Board of the Bangko Sentral ng Pilipinas, 703 SCRA 290)

The Monetary Board, under RA No. 7653, has been invested with more power of closure and placement of a bank under receivership for insolvency or illiquidity, or because the bank’s continuance in business would probably result in the loss to depositors or creditors. Id

To address the growing concerns in the banking industry, the legislature has sufficiently empowered the Monetary Board to effectively monitor and supervise banks and financial institutions and, if circumstances warrant to forbid them to do business, to take over their management or to place them under receivership. Id

A trust receipt transaction is one where the entrustee has the obligation to deliver to the entruster the price of the sale, or if the merchandise is not sold, to return the merchandise to the entruster. (Hur Tin Yang vs. People, 703 SCRA 606)

When both parties enter into an agreement knowing fully well that the return of the goods subject of the trust receipt is not possible even without any fault on the part of the trustee, it is not a trust receipt transaction penalized under Sec. 13 of the PD 115 in relation to Art. 315, paragraph 1(b) of the Revised Penal Code, as the only obligation actually agreed upon by the parties would be the return of the proceeds of the sale transaction. This transaction becomes a mere loan, where the borrower is obligated to pay the bank the amount spent for the purchase of the goods. Id

The fact that the entruster bank, Metrobank in this case, knew even before the execution of the alleged trust receipt agreements that the covered construction materials were never intended by the entrustee (petitioner) for resale or for the manufacture of items to be sold would take the transaction between petitioner and Metrobank outside the ambit of the Trust Receipts Law. Id

A banking institution is obliged to exercise the highest degree of diligence as well as high standards of integrity and performance in all its transactions because its business is imbued with public interest. (Comsavings Bank (now GSIS Family Bank) vs. Capistrano, 704 SCRA 72)

Gross negligence connotes want of care in the performance of one’s duties; it is a negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected. Id

The power of a corporation to sue and be sued is exercised by the board of directors. (Esguerra vs. Holcim Philippines, Inc., 704 SCRA 490)

Under the Negotiable Instruments Law, a check is payable to cash is payable to the bearer and could be negotiated by mere delivery without the need of an indorsement. (People vs. Wagas, 705 SCRA 17)

Section 3 of Republic Act No. 10142 states that rehabilitation proceedings are “summary and non-adversarial” in nature. (Steel Corporation of the Philippines vs. Mapfre Insular Insurance Corporation, 707 SCRA 601)

Section 155, in relation to Section 170, RA No. 8293, punishes trademark infringement; While Section 168, in relation to Section 170, penalizes unfair competition. (Century Chinese Medicine Co. vs. People, 709 SCRA 177)

Under Section 2 of RA 166, which is also the law governing the subject applications, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to the application for registration. (Birkenstock Orthopaedie GMBH and Co. KG (formerly Birkenstock Orthopaedie GMBH) vs. Philippines Shoe Expo Marketing Corporation, 710 SCRA 474)

Registration merely creates a prima facie presumption of the validity of the registration, of the registrant’s ownership of the trademark, and of the exclusive right ot the use thereof. Id

A trademark is an industrial property over which its owner is entitled to property rights which cannot be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true and lawful owner. Id

The rule is settled that a corporation is vested by law with a personality separate and distinct form the persons composing it; a director, officer or employee of a corporation is generally not held personally liable for obligations incurred by the corporation and while there may be instances where solidary liabilities may arise, there circumstances are exceptional. (Saverio vs. Puyat, 710 SCRA 747)